Megatrends

The most influential Megatrends set to shape the world through 2030, identified by Euromonitor International, help businesses better anticipate market developments and lead change for their industries.

Why City Insights Matter for Business Strategy: Digitalisation in Eastern European Cities

At a time when online shopping is booming and competition is intensifying, understanding the dynamics of household internet adoption are vital to executing a successful business strategy. The growth of internet shopping in Eastern Europe may not rival that of Asia-Pacific or Africa and the Middle East, but the region is still benefiting from rising incomes and improving standards of living. Just in the period 2011-2016, internet retailing in Eastern Europe more than doubled in constant value terms, adding USD14.6 billion and this is expected to reach USD19 billion over 2016-2021. The article builds on the strategy briefing: Why City Insights Matter for Business Strategy and seeks to set out some key facts regarding the uptake of broadband internet in Eastern Europe which will play a key role in the region’s prospective online retail market.

With 93% of households having access to broadband internet in 2016, Tallinn is the most digitalised city in Eastern Europe— significantly exceeding that of the neighbouring Riga (82%) and Vilnius (76%). Tallinn’s high internet possession rate can be likened to vastly developed cities such as London (93% of households with broadband internet access in 2016), Zurich (92%), Paris (89%) and Tokyo (88%).

Some of the lowest rates of broadband internet possession are found in Ukrainian and Bosnia-Herzegovina cities. Whilst this figure stood at 48% in Kiev in 2016, the smaller cities of Mariupol (26%), Odessa (19%) and Lvov (16%) show far less impressive results. In Bosnia-Herzegovina’s capital city, only 24% of households had access to broadband in 2016.

Some of the fastest rates of broadband internet adoption were seen across Russian and Serbian cities. Over 2011-2016, Izhevsk, Russia recorded a 34 percentage point rise in households with broadband internet access, followed by Novi Sad, (Serbia) and Volgograd (Russia), with both growing by 32 percentage points.

According to Euromonitor International forecasts, Kiev’s households will experience the most rapid growth of broadband internet in the next few years, growing by 14 percentage points over 2016-2021. Other cities that are expected to show swift adoption of broadband internet are: Nyíregyháza (Hungary), Panevežys (Lithuania), Šiauliai (Lithuania) and Miskolc (Hungary) which are all expected to record 11 percentage point rises each.

By 2021 only 28% of Eastern European cities analysed by Euromonitor International will exceed the European average broadband internet access rate of 79%. Thus, there is still potential for increasing the number of households with access to broadband internet in the region and in turn further developing internet shopping.